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Israel Bans Congresswomen from Visiting; Investors on the Edge Amid a Trade War; O'Rourke Restarts 2020 Campaign. Aired 12-12:30p ET

Aired August 15, 2019 - 12:00   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

(COMMERCIAL BREAK)

[12:00:17] JOHN KING, CNN ANCHOR: Welcome to INSIDE POLITICS. I'm John King. Thank you for sharing a very busy news day with us.

Another norm-busting tweet and then a big decision from the Israeli government. Two Democratic congresswomen are told they are not welcome to visit. This after the president tweets Israel would be showing great weakness if it welcomed Congresswoman Ilhan Omar and Rashida Tlaib.

Plus, China says it hopes to work with the president, but will retaliate if he again escalates the trade war. The threat of recession is real. The president says all this turmoil, not his fault.

And changes in the 2020 Democratic field. The former Colorado governor, John Hickenlooper, is bowing out and may run for Senate. Former Congressman Beto O'Rourke is heading back on the trail and says his time home after the El Paso shooting tells him a Senate run would be a mistake.

(BEGIN VIDEO CLIP)

BETO O'ROURKE (D), PRESIDENTIAL CANDIDATE: That would not be good enough for this community.

We must take the fight directly to the source of this problem. That person who has caused this pain and placed this country in this moment of peril, and that is Donald Trump.

(END VIDEO CLIP)

KING: Back to 2020 in a moment.

But we begin the hour with a big and dramatic move today by Israel. A spokesman for Israel's foreign ministry saying the country will forbid two sitting U.S. congresswomen from traveling there. The two congresswomen, Ilhan Omar and Rashida Tlaib, both have expressed anti- Semitic sentiments on multiple occasions and both support a movement to boycott Israel. That is one big point of contention anyway.

But the timing is what exacerbates things here. Israel has elections just around the corner. Prime Minister Netanyahu is trying to hold power. Add in a planned visit by the congresswoman to the Al-Aqsa Mosque, a sacred Muslim site but one that also sits on The Temple Mount. The Temple Mount long been disputed. And conservative voices in Israel worry a Palestinian escort to the religious landmarks might be seen by some as legitimizing Palestinian claims to the site.

The other big factor, though, the president of the United States. President Trump tweeting just earlier today, Israel letting Omar and Tlaib in, quote, would show great weakness.

CNN's Oren Liebermann live for us in Jerusalem as this plays out.

Oren, this is a big decision by Prime Minister Netanyahu and his government. Why?

OREN LIEBERMANN, CNN CORRESPONDENT: Unprecedented for a number of reasons. First, we've never seen President Donald Trump dictate what Israel's foreign policy should be in quite this way, essentially telling Israel you shouldn't allow these two in. And then a short time after that, we got the official decision of the Israeli government from a spokesman for the deputy foreign minister, but since then the interior minister and, of course, Prime Minister Benjamin Netanyahu have confirmed that saying they have decided to ban these two congresswomen, Rashida Tlaib and Ilhan Omar, from visiting.

That is also unprecedented that Israel would not allow a sitting U.S. congressperson into the country. And in his statement, Netanyahu seemed to reference that, saying that Israel has tremendous respect for not only the United States but also for the American Congress, but then he went on to try to explain his decision saying Israel cannot allow these two to enter the country because of their support for a boycott of Israel. He accused them of trying to damage Israel in their trip. And, as an example, said the listed destination of their journey was not Israel, it was Palestine. For those reasons Netanyahu said he decided to ban, along with some of the other Israel officials, their entry into the country which was scheduled to start just tomorrow.

Again, there was no statement on when this decision was made, but it was certainly announced right after Trump's tweet saying Israel would be showing great weakness by allowing them in. So this decision, after a day of contemplation, has been set, John.

You're absolutely right to point out the political considerations here, which you did just a short time ago. Netanyahu has an election he's facing. This may sit well with his right-wing voter base as he has a tough re-election campaign. The bigger risk, though, has he just created an even greater fracture between Israel and the Democratic Party?

KING: That's a fascinating moment. Oren Lieberman, we'll stay in touch as the elections play out in the days ahead. We'll keep watching that.

And with me here in Washington to share their reporting and their insights, Eliana Johnson with "Politico," CNN's Jeff Zeleny, Matt Viser with "The Washington Post," and Laura Baron Lopez with "Politico."

Let's start here in the sense that it is unprecedented for a president to tweet at a foreign government, do not let Democratically elected members of Congress come and visit. Yes, they have said quite controversial things. But this country gives billions of dollars in economic and military aid to Israel. It is supposed to be two democracies that are willing to air their differences and have their debates.

What does it say that the president of the United States would decide, you know what, I'm essentially going to tell, using Twitter, my friend Bibi, don't do this.

ELIANA JOHNSON, CNN POLITICAL ANALYST: Yes, I think the president's direction is what's anomalous here. To take a step back, Israel would be and is fully within its rights to deny entry to the two women, to the two congresswomen because they support the boycott, divestment and sanctions movement which aims to economically isolate Israel and, if followed through, would cripple the Israeli economy. But a month ago the Israeli ambassador said they planned to let the congresswomen visit.

[12:05:22] So what's changed? Either Bibi got poll numbers suggesting that this was popular, as Oren suggested, or he's responding to pressure from Trump. Now, American presidents use --

KING: Or both.

JOHNSON: Or both.

And the timing of this, which President Trump tweeted and then about an hour later the Israeli government made the announcement. The Israeli government and the American government are typically careful and the Israeli government, particularly chafes at the suggestion that it is acting according to the dictates of the U.S. government or that it's the lapdog -- that's usually a pejorative term -- of the American government. So I think the greater issue here is, is Bibi acting under pressure from Trump. I think the optics are troubling.

KING: Right. Because the president has, and it's been quite clear, he's trying to drive a wedge between Israel and the Democratic Party. He's trying to use these two, yes, at times very controversial, Democratic congresswomen as part of that effort.

Prime Minister Netanyahu now helping him.

MATT VISER, CNN POLITICAL ANALYST: There are two things I think we've gotten used to, which is President Trump sort of, you know, going against tradition, which is keep politics at the water's edge, and Republicans sort of going along with him. This precedent is potentially dangerous here that Republican members of Congress, who have not really spoken up against this order from the president, where the president is telling a foreign government to not allow democratically elected members of Congress to enter an ally, that country of Israel.

So I think that the precedent is potentially dangerous. And you would think that Republican members of Congress would sort of stand up for the institution of Congress. That it's important for members, regardless of party, to be able to travel to foreign countries.

LAURA BARRON LOPEZ, NATIONAL POLITICAL REPORTER, "POLITICO": And to what Matt said, it's -- it is a very stunning move by the president. It's unprecedented. A day prior, Kevin McCarthy, the minority leader, did side with Hoyer and say that he thought that Israel should allow these two women to go into the country. But, yes, we haven't heard from many Republicans after Trump's tweet. And it's also striking considering that personal pleas were made with the Israeli ambassador to the U.S. by Jewish members of Congress, Jewish Democrats, who don't agree with Tlaib or Omar on their policies.

KING: Right. And a lot of Democrats don't agree with Netanyahu and his policies.

JEFF ZELENY, CNN SENIOR WASHINGTON CORRESPONDENT: Right.

KING: A lot of them don't think that he's actually trying to move forward on peace. I mean the -- how this plays out should a Democrat win the White House, depending on what the leadership of Israel is, is a whole other ball game.

But in the here and now of the politics, Elizabeth Warren, Democratic candidate for president, senator from Massachusetts, tweeting today, Israel doesn't advance its case as a tolerant democracy or unwavering U.S. ally by barring elected members of Congress from visiting because of their political views. This would be a shameful, unprecedented move. I urge Israel's government to allow the two congresswomen to come.

Obviously Israel's government since then has said it will not.

Will the president, you know, forgive the frame, but will the president get his wish? Will this now create a divide between Democrats and Israel that the president believes he can use to his political advantage here at home?

ZELENY: I'm not sure. It's always been his hope and it's also his hope to keep this fight alive with those two members of Congress and others. You know, it's been a few weeks since there's been a skirmish back and forth, so this brings it up.

He has a rally tonight. I'd bet a dollar he talks about that at the rally tonight.

But, look, I think that there are so many other issues that drive Democrats to, you know, support a broader and larger policies here. So I would be surprised if it -- if he's successful driving a wedge long term.

But I think it just looks like Bibi's weak here. He's like following President Trump's lead. And, to me, that, you know, the stunning part of that is on his side more than on Trump's side. It's not surprising that President Trump did this at all by this point (ph).

KING: Right. It will be fascinating to see how that point plays out because Netanyahu's calling card is strength. He had the elections -- narrowly won the elections not that long ago. Has to go back and do it again because he couldn't form a coalition government. We will see. Can he portray this as him standing up strong and --

ZELENY: And if you flip this around, what would happen if two Republican members of Congress were banned from some place.

JOHNSON: Well, I think to Jeff's point on Bibi appearing weak, I think the president put him in a really tough position --

ZELENY: For sure.

JOHNSON: By saying it would be a weak move. Bibi was really damned if he did and damned if he didn't. Either having the president criticize him as weak or appearing weak by doing what the president wanted. So I think -- I think Trump put him in a really tough spot.

KING: Right. And he's made his choice and now we will see how it plays out. We'll stay on top of this one.

Up next for us, to the economy. Investors try to recover from a volatile few days on Wall Street and they're looking to President Trump to signal his next move.

And, if you have any questions for us today on today's political stories, here or around the world, for anybody here at the table, tweet us. Use the hash tag INSIDE POLITICS. We'll try to answer your questions at the end of the show.

[12:10:04] We'll be right back.

(COMMERCIAL BREAK)

KING: Welcome back.

President Trump, today, looking to quiet turmoil on Wall Street and to end talk of a possible recession that many say this turmoil is of his own making. You see the big board right there, up 117, 116. It's been up, it's been down, but at least trading in modest ranges today after yesterday's volatility.

President Trump looking to soothe the whiplash, assuring today in a radio interview he's got a handle on all this.

[12:15:06] (BEGIN VIDEO CLIP)

DONALD TRUMP, PRESIDENT OF THE UNITED STATES: The economy is phenomenal right now. With a normalized interest rate, we're doing phenomenal. We had a couple of bad days, but we're having -- we're going to have some very good days because we had to take on China.

It should have been done by -- long before I came along. But I'm the one that gets -- I'm the one that gets stuck with it and I'm the one that's going do it. And I've -- we're making tremendous progress. China, frankly, would love to make a deal.

(END VIDEO CLIP) KING: The president's Twitter account, of course, is often part of the volatility. A few highlights here just from yesterday where he played a heavy round of blame game.

Our problem is with the Fed, the president says. Raised too much and too fast. Now too slow to cut. The president bashing, quote, clueless Jay Powell and the Federal Reserve. And he laments the, quote, crazy, inverted yield curve. We should easily be reaping big rewards and gains but the Fed is holding us back. That from the president.

Mark Zandi is the chief economist for Moody's Analytics. He joins us live from Westchester, Pennsylvania.

Mark, let's set the tweets aside for a second. We do have now a very real, more real prospect of recession. Non-economic terms, but are there pieces on the chess board that the president or any other policy maker can move to prevent that, or are we getting close to the point where the snowball is going down the hill and you just can't stop it?

MARK ZANDI, CHIEF ECONOMIST, MOODY'S ANALYTICS: Yes, sure, the president could tweet that he had a call with President Xi of China and they came to some kind of arrangement and they're going to wind down the trade war. I don't think it will be a substantive agreement, nothing that will change all the grievances we have with China, but it will be a face-saving arrangement and I think that would be enough to quell the uncertainty and keep the economy moving forward.

But having said that, to your metaphor, I think with each passing day that the president doesn't send out that tweet, the more likely he's not going to be able to turn this thing around. A recession will take on its own dynamic. And no matter what he does, he won't be able to turn it around.

KING: Do you have a clock for that, a reasonable clock, saying that you better calm things down by date x or else we're at the point of no return?

ZANDI: I think it's in the next few months. You know, I think the key here is what businesses decide to do with all of this. If they -- they've already cut back on their investment. That -- that has flat- lined since the trade war began a little over a year ago. They are starting to become more cautious in their hiring. Job growth has slowed quite sharply since this time last year. If they step back a little bit further on hiring and unemployment starts to rise, then that's the fodder for recession. And I think under current conditions, if the president does nothing with regard to the trade war, we'll probably hit that point of no return sometime this fall.

KING: And the president says this is Jay Powell and the Fed's fault. There are a lot of people who say, no, that it's a much more complicated discussion, there are global factors. But if you want to blame one person in the United States, it would be the president and his unpredictable tweets.

Which would you pick? ZANDI: Yes, this is not complicated at all. This is President Trump's

fault. I mean the Fed, poor Fed, they're trying to follow this guy around. He's gone from here to there and everywhere else and created all this uncertainty. And the Fed is trying to calibrate monetary policy, interest rates, to offset the bad policy he's putting in place.

So it has nothing to do with the Fed. This has everything to do with the very poor trade policy that the president is pursuing.

KING: Mark Zandi, appreciate your insights.

Stay close to that camera in the weeks ahead, though, as we get closer to your deadline out there.

Joining our discussion here in studio, Damian Paletta of "The Washington Post," Jeanna Smialek of "The New York Times."

To follow up on what Mark was saying, you're in this moment now where, both from an economic standpoint, which matters most to the people watching here at home, and the president's political standing, which is you do not want a recession heading into your re-election year, that's quite obvious, what policy levers are there from the U.S. perspective? You know, if Germany tips into recession, there's nothing the president of the United States can do about that. You saw the bad numbers out of China overnight, or bad numbers out of the U.K. in recent days.

But what policy levers are available to a president of the United States?

DAMIAN PALETTA, WHITE HOUSE ECONOMIC POLICY REPORTER, "THE WASHINGTON POST": Well, it's a great question. I mean during -- you know, usually the stimulus we see is more spending and tax cuts. The White House has already done that. So that's not really in their playbook anymore.

The big fear, I think, for the White House, you know, Mark just talked about business investment pulling back. As soon as consumer spending pulls back, then you've got a real fiasco because that's the thing that's been really dragging this economy along is consumer spending. If consumers decide, you know what, we can't take any more of this stock market stuff, we're going to wait out this holiday season, then the White House has got a real problem on its hands.

KING: And as the president, you heard him, everything's great, right? Everything's great. And the president often says, I just want to show a few things. Number one is U.S. job growth. This goes back to 2008. It makes a number of points. Number one, that this boom we're having started during the back half of the Obama administration. The president like -- doesn't like -- the current president doesn't like to acknowledge that but it started and some of the job growth in the late Obama administration is actually greater than the job growth in the Trump administration.

But notably, as you think about the possibility of a recession, job growth has slowed somewhat. And then you look at the unemployment rate, which if you're a president running for re-election and you can say, you know, the unemployment rate is at 3.7 percent, and look at that line, even just the lines since Trump became president, that's great. However, if we get at or in recession, that's going to start to go up.

[12:20:17] JEANNA SMIALEK, FEDERAL RESERVE AND ECONOMY REPORTER, "THE NEW YORK TIMES": Yes, absolutely. And I think that is a huge risk for Trump -- the Trump administration as we approach next year because it's not at all clear that we aren't going to enter a recession before that.

I do think, as Mark was saying, one really important lever that the White House has to pull here is removing the uncertainty card. You know, if they give businesses a little bit more of a certain backdrop to invest and spend within, I think that could do a lot to sort of stabilize this economy.

KING: By that you mean cut a modest deal with China and forget the bigger issues.

To the president's credit, he has brought to the table, that other presidents have been unwilling to pick the fight, intellectual property, some other -- Chinese economic structural issues. Other presidents have shied away for just this reason, because the Chinese tend to have a longer view and they dig in and it causes political problems for us here at home.

PALETTA: And -- yes, and Democrats actually support his tough approach with China. What they've been objecting to is this kind of herky-jerky one-day tariffs, the next day delay, thing that's really freaking the market out. And so I think if there was a little more consistency from the White House, everyone would kind of breathe easier. But right now we're having a lot of these decisions made and announced on his Twitter account and that's what's sending everyone to pull back.

KING: And what's the political conversation inside the building, where if you're a political advisor to the president -- if you're Peter Navarro and you're the hawk on trade, you say, president, hang in there. Hang in there. We'll be OK, hang in there. If you're his campaign manager, I think you're saying, Mr. President, get out of there, right? Get out of there. Fix this as quickly as you can.

JOHNSON: That's right. He's certainly hearing that from his political team, but also from a lot of his economic advisers who are saying when it comes to tariffs that these tariffs are going to hurt American consumers more than they're going hurt the Chinese. And for that reason the Chinese can wait him out. And I think that's why you saw the president delay the tariffs from September 1st to mid-December. His trade team sat down with him last week and said that they were hearing an outcry from American retailers who said if he imposes these tariffs in September, it is going to crush holiday sales and really send both consumers and retailers into a panic. And I think that really would have hurt his re-election chances.

So he did agree to delay them until December 15th. Now, whether they will go into effect December 15th, I think we're going to see a whole new round of negotiations and speculation around that date at this point.

KING: It will be fascinating to watch as we go forward. Appreciate you guys coming in to talk economy with us.

Next, Beto O'Rourke returns to the campaign trail with a new campaign and bound to be controversial campaign theme.

(COMMERCIAL BREAK)

[12:27:24] KING: A campaign restart today for Beto O'Rourke. O'Rourke spent the past two weeks off the trail, back home in El Paso. That time away important time to help his community heal after a horrible mass shooting and for the former congressman to rethink his so far rocky 2020 bid.

Today, the candidate says the violence that hit home is the big reason he's staying in the presidential race and what O'Rourke sees as the spark for that violence, what he calls President Trump's open racism, one of his big new campaign themes.

(BEGIN VIDEO CLIP)

BETO O'ROURKE (D), PRESIDENTIAL CANDIDATE: We have a racism in America that is as old as America itself.

We have always tried, until now, to change that. Until this president, who so openly speaks in racist terms.

(END VIDEO CLIP)

KING: O'Rourke's other big new motivator, guns, and a proposal that puts him on the left, very left, of the Democratic field.

(BEGIN VIDEO CLIP)

BETO O'ROURKE (D), PRESIDENTIAL CANDIDATE: Not only do we need universal background checks, not only do we need red-flag laws that would stop somebody when they pose a danger to themselves or someone else, not only do we need to end the sale of assault weapons and weapons of war that were designed for the battlefield and have no place in our communities, but we must, as a country, buy those weapons, take them off the streets altogether.

(END VIDEO CLIP)

KING: You rule nothing out and a lot of people have said since this tragedy back home he seems more animated, more personal, more agitated. Is there room for a Beto reset?

VISER: Potentially. I mean he has found his voice in a way that he's lacked over the two or three months. He's been struggling a little bit. He's had different resets, though, in the past where he started off saying immigration was going to be a big issue that his campaign would be about. He changed later to climate change was going to be a big issue that his campaign was going to be about. And now it's gun control. But you do have a sense that he's really animated in this and is

pivoting toward taking it to President Trump more aggressively than he has in the past. In his Senate race he wouldn't contrast himself with Ted Cruz or Trump. He wouldn't mention Trump a lot of times. Now he is. And that's giving him a new focus.

KING: And we've got almost six months until anybody votes. And so we're going to say this a lot. I'll be a broken record. We don't know what's going to happen. There's a lot of time and a lot can change.

Beto O'Rourke has qualified for the next round of presidential debates, unlike a conversation we might have later in the show, so he has every reason to stay in the race and give it another shot to see if it works.

[12:30:02] But the math is just not great if you look at it. Back in April, he was at 6 percent in Iowa. That's back in April. Six percent not a stunning number.

END